Separate the news from the noise and focus on the data that really matter. Please add me to Western Asset Management's "By the Numbers" subscription list.

First Name:

Last Name:

Email Address:

Note to current clients: Submitting this form does not change your email address on record, or your account information and other mailings from Western Asset; it only updates your email address for "By the Numbers." Please contact your CSE to update account information.

We have received your request.

We're sorry to see you go. Please allow up to 48 hours for your email address to be removed from our "By the Numbers" subscription list.

Please remove me from Western Asset Management's subscription list.

Email Address:

Note to current clients: Submitting this form only unsubscribes your email address for "By the Numbers." Please contact your CSE to update additional account information.

July Payroll Jobs in Line with Expectations, That Is, So-So

August 07, 2015

Private-sector payrolls rose 210,000 in July, with our “core” measure (excluding construction and retailing) up 168,000. June data saw minor revisions: total private sector revised up 6,000, core payrolls revised down 1,000. The gains were in line with expectations, and as seen in the chart, they were also in line with the trend growth rates of the last 5 years.

Therein lies the rub. Those who say that the economy is doing fine will cite these numbers in support of their story. Those who worry about the sluggish growth pace of recent years will also find support in today’s data.

Wall Street consensus analysts—and some Fed officials—have been trying to have it both ways. They have been extolling recent job growth rates, while also extolling “improvement” in the economy... which sure sounds like accelerating growth. Today’s data—as well as those of recent months—clearly do NOT indicate accelerating growth, so the Street and Fed take is at best only half right.

Is “half right” enough to drive a 2015 rate hike? Probably. If nothing else, it would be extremely hard and politically delicate to initiate rate hikes in the middle of a 2016 presidential election campaign, so the economy would have to deteriorate markedly to clearly forestall Fed action this year.

That hasn’t happened. While GDP growth has slowed so far this year, job growth hasn’t. So, a rate hike is on the table, but to our minds, the more important question is whether the Fed will hike rates aggressively enough to push down stock and bond prices. We don’t think the Fed wants that.

In other aspects of the report, the unemployment rate held steady, but the employment rate (jobs divided by adult population) weakened. We are still at a lower employment rate now than was the case at the trough of the recession in June 2009. Within the manufacturing sector, jobs rose in July, but that gain was fully offset by downward revisions to July data, so the 2015 factory stall looks to still be in place.

Private-Sector Job Growth

Chart Source: Bureau of Labor Statistics. As of 31 Jul 15.

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 42 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.

Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK and EEA countries as defined by the FCA or MiFID II rules.